Paying the Real Price of Living in the Most Expensive City in the World

A tale of three neighborhoods with the winners and losers of Tel Aviv’s booming real estate market

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A tale of two cities: The Ha’agazim neighborhood in southeast Tel Aviv.
A tale of two cities: The Ha’agazim neighborhood in southeast Tel Aviv.
Adi Cohen
Adi Cohen

One of the most complicated sagas in Tel Aviv-Jaffa’s recent past concluded last week when a local planning committee approved a massive plan to build 1,800 homes in south Tel Aviv’s Ha’argazim neighborhood. This was a historic step that will upgrade a neglected, dilapidated area.

A significant portion of the neighborhood still consists of crumbling old homes, hastily erected shacks and winding dirt paths rather than sidewalks. The new plan will allow all this to be replaced with apartment buildings – some of which will be as much as 33 stories high.

The plan also includes a program to compensate the 200 or so families still living there who will now face eviction. The current compensation plan was settled after years of legal proceedings, failed eviction attempts and a stubborn battle by residents over both the size of the compensation and the eligibility criteria for receiving it.

Tel Aviv from the air: extreme inequality, based on real-estate ownership.Credit: Tomer Appelbaum

“Naturally, not all the residents are 100 percent satisfied,” said one resident, Dorit (who asked that her last name not be published). “But ultimately, we reached an agreement and the story has ended.”

Dorit herself is happy – and for good reason. As a longtime resident of Ha’argazim, she’ll be compensated with a four-room apartment in one of the new apartment towers. She’ll also receive $50,000 to cover her rent while the tower is under construction.

This compensation package, which has already led to more than 100 families leaving, applies to some 180 households. Their eligibility was determined by a survey conducted by the state in 1996, before the land was sold.

At the time, according to Israel Tax Authority records, a four-room apartment in that neighborhood sold for 400,000 to 600,000 shekels ($128,000 to $193,000). But since then, prices have skyrocketed and the value of the compensation package has risen accordingly. It now stands at 2.8 million shekels on average (about $900,000), based on data from the real estate website Madlan.

Dorit’s children, who were born and raised in Ha’argazim, will also be compensated with a new apartment at a reduced price. That was stipulated under a supplementary compensation agreement that was drafted in 2019 and finalized together with the approval of the construction plan. It will cover another 200 families in the neighborhood who were excluded from the original agreement.

Only millionaires welcomed: The old Givat Amal neighborhood and construction work in the background. Credit: Hadas Parush

Many of these families are descendants of the neighborhood’s original residents. But quite a few of them moved there more recently, though all arrived at least 15 years ago.

Under the plan, these families will get three-room apartments in one of the new buildings for just 750,000 shekels. Given the steady rise in housing prices in the neighborhood, this compensation will likely be worth more than 3 million shekels per family.

Who holds the power?

The local municipality finally brought the compensation saga to an end by mediating between the developers and the residents.

“From the municipality’s standpoint, clearing out the Ha’argazim neighborhood was a strategic project, after years in which we were unable to renew and develop the area,” said a source involved in negotiations over the deal. What finally paved the way for the generous compensation, he noted, was a zoning change promoted by the city that gave the developers the right to build an extra 900 apartments.

“Over the years, the neighborhood has become an area for prostitution and crime, and a real danger to the lives of those who live there,” the source added. “The municipality clearly understand that without its intervention, nothing would move and the neighborhood wouldn’t take off.”

Police conducting evictions in the Givat Amal neighborhood of north Tel Aviv last month. Credit: Moti Milrod

The source noted that this case was different from another old, neglected neighborhood, Givat Amal, which is located in a desirable area in the city’s north. “It was clear we would have no difficulty attracting a new population there,” he said.

“In the end, the city also has the power and the tools to affect the amount of compensation and the number of residents who will be compensated – two things that largely depend on the building rights the municipality approves. I expect other city neighborhoods in similar situations will see what was done in Ha’argazim and demand similar treatment,” he concluded.

Eli Levy, head of the municipality’s property division, made a similar assessment two years ago. “This is an proposal that goes above and beyond for the neighborhood residents, and I don’t know of another one being done like this anywhere in Israel – where the rights given to the developers enable the entire neighborhood’s problems to be solved,” Levy said at the time. He predicted that the Ha’argazim neighborhood would lead to similar proposals in other city sites, including Maccabi Jaffa and Nes Lagoyim.

To the right, the area where the new skyscraper will be built on the ruins of Givat Amal neighborhood of north Tel Aviv . Credit: Ofer Vaknin

One could argue that there is a clear logic to the municipality’s move, since these plans have the potential to revive other neglected neighborhoods. But unlike Ha’argazim, the fate of the evictees is not the same in other neighborhoods. Their fate rests on historic agreements made by the state and the economic interests of developers who accepted almost full responsibility for executing the plans.

In this scenario, widescale evictions could lead to the pushing out of an aging, socioeconomically weak community and its replacement by a stronger and more affluent one, and injustice toward the original residents – who already feel ignored by the authorities.

Long-standing plan

Residents of the Kfar Shalem neighborhood say the anger and frustration that has been in the air in nearby Ha’argazim for years has now come to their streets too.

“In recent weeks, hardly a day goes by without having police roaming the neighborhood. They’re making the people afraid, signaling that the evictions will start anytime soon, and that if we know what’s good for us we’ll give in and take what we’re offered,” says Sara, who was born in the neighborhood.

“I’ve moved, but my parents have lived here from as far back as I can remember. In the 1940s and ’50s, the state settled my mother’s family here and, like me, she was born here and lived here her whole life.”

A fence in the old Givat Amal neighborhood featuring the word "War" and a poster of Tel Aviv Mayor Ron Huldai, against the backdrop of new luxury apartments. Credit: Tomer Appelbaum

Sara’s parents’ home is part of a group of 20 houses in the heart of Kfar Shalem situated where the Tel Aviv light rail’s Purple Line is supposed to run. These structures were meant to have been evacuated by August 2020, subject to injunctions issued by NTA Metropolitan Mass Transit System (the company building the light rail). But due to the refusal of the remaining families to accept the compensation they were offered, plus the opposition of then-Transportation Minister Miri Regev to forcibly evict the residents, the eviction was not carried out.

The decision to evacuate and rebuild Kfar Shalem was actually made as far back as the ’60s, but various attempts to advance the evictions have come to naught. The number of evictions that have actually occurred since then is minimal.

As of today, according to municipality estimates, Kfar Shalem comprises some 600 to 800 landholding households. These are the descendants of 400 Jewish families who, at the end of the War of Independence in 1949, were sent by the state to settle on the site of Salama, to prevent the original Arab residents from returning to their village.

As in the case of Givat Amal, which was populated in a similar way, in Kfar Shalem too the state refrained from standardizing ownership of the land, which enabled it to avoid developing the infrastructure there. As a result, the neighborhood devolved into an impoverished, high-crime area that also attracted numerous squatters.

An aerial shot of Tel Aviv's Kfar Shalem neighborhood. Residents say their suggested compensation is based on 2012 housing prices. Credit: Eyal Toueg

In 2014, the Halamish company, which is responsible for the eviction of the Kfar Shalem families and payment of compensation, put the eviction issue back on the agenda. Since then, the effort has been led by the Israel Land Authority. The eviction plan was only finally approved last August, signed off by Finance Minister Avigdor Lieberman and Housing Minister Zeev Elkin.

The proposal stipulates that every person or members of their nuclear family who appear in the population census conducted in the neighborhood in 1975 shall be eligible for 1.4 million shekels in compensation. Third-generation descendants of the neighborhood’s original residents will be eligible for 300,000 to 400,000 shekels. The maximum amount of compensation – 1.7 to 1.8 million shekels – will go to original residents (from the first 400 families) or their family members who have at least three children.

Sara’s parents were part of the original group of families. “Let NTA or Halamish come here and show me where you can buy an apartment in this area, or anywhere in Tel Aviv, for 1.7 million shekels,” Sara says. “When we said that to them, they offered us public sheltered housing instead of money. For my parents, who’ve lived here their whole lives, in a house with a yard where they spend most hours of the day, sheltered housing is just not an option. It’s a very hard feeling. The way they see it, the state is removing them from their home: the place where it put them and where they’ve lived their whole lives. People think they’re trying to get a buyout at the state’s expense. But all they want is due compensation that will enable them to buy a home in the area that suits their needs.”

With the change of government and a renewal of the threat to forcibly evict the residents, the struggle recently reached the Knesset. “The compensation that NTA is granting some of the Kfar Shalem evictees is ludicrous, and the criteria for compensation do not match the situation in the field or the present housing prices,” said the Knesset Interior and Environment Committee last month, at the conclusion of a session led by MK Walid Taha (United Arab List) concerning the compensation package for families living on the Purple Line route.

A house in the Kfar Shalem neighborhood.Credit: Moti Milrod

The compensation being paid to these residents by NTA is identical to the designated compensation for the rest of the Kfar Shalem residents to be paid by the government through Halamish.

At the same Knesset committee meeting, several lawmakers pointed out the problematic aspects of NTA being the authority that determines eligibility for compensation and the amount of compensation, while it is also the body carrying out the eviction of the residents and the only forum to which they may appeal.

A few weeks ago, the residents sent a letter to Attorney General Avichai Mendelblit, arguing that the amount of compensation was supposed to be the equivalent of the cost of an average (not new) four-room apartment in the area. Instead, they said, it is based on the cost of such apartments in 2012. According to the Madlan real estate website, in 2012 the price of an average four-room apartment in the area was 1.46 million shekels; today it is 2.3 million shekels.

The Kfar Shalem residents also cited the accord for the Givat Amal neighborhood, where the forcible eviction was recently completed. There, in accordance with a historic court ruling, the evicted residents received compensation equivalent to the cost of an alternative apartment in the area, based on the latest market prices – which was about 3 million shekels per family.

This compensation was paid to the families by Yitzhak Tshuva’s Elad Residence company, which promoted the construction of a luxury residential complex on the site, though it will now be developed by the Hagag Group and Y.H. Dimri, who bought the rights from Elad.

“When Tshuva is evicting dozens of families in Givat Amal while building hundreds of apartments on one of the most expensive pieces of land in Tel Aviv – he can afford to be generous,” says Zohar Tal, chairman of the Oz Zionist Foundation and a Kfar Shalem activist.

The old Kfar Shalem neighborhood of southeast Tel Aviv.Credit: Moti Milrod

“We saw a similar situation with the projects that were promoted by Alfred Akirov in the north of the city [the Akirov Towers], where residents also had to be evicted. Ultimately, each of the evicted residents was given either an apartment or a sum of money equivalent to the value of an apartment in the area, so you didn’t have a situation where the residents were forced to leave the neighborhood, where they’d lived their whole lives, without any suitable housing solution.

“In Kfar Shalem, however, the state stipulated that the compensation come from the marketing of the land and the future construction,” Tal added. “But currently, the city’s construction plan calls for only 1,500 apartments to be built here. This plan has not been updated for years and the housing density in it is very low and irrelevant to what’s happening in the city today.

“We wouldn’t be surprised if, as happened in the Ha’argazim neighborhood, the plan is updated later on and two to three times more apartments are built. The developers and landowners would then pocket much larger sums, without the compensation to the residents being adjusted too. Meanwhile, what we have is a relatively small fund from which compensation is being distributed to all the residents of the neighborhood, and there’s no one with a financial interest to accelerate the eviction and give the residents proper compensation as what given in other places,” Tal argues.

On the other hand, the people of Givat Amal might argue that the Kfar Shalem and Ha’argazim residents are better off, as in those neighborhoods the children and grandchildren of the original residents will also be included in the compensation package. In Givat Amal, however, it was decided that descendants of the original residents are not eligible for compensation.

A municipality official who was involved in developing the proposal says, “In Kfar Shalem, where the entire area consists of state lands, there were negotiations over the years between the state and the residents, and so the criteria for compensation improved. In Givat Amal, on the other hand, the state sold the land to private developers and passed on the task of eviction with it – with the historic agreements and commitments to the residents being fixed, without the possibility of demanding more from the developers.

“However, when a developer wishes to build and is anxious to get the planning advanced, they’re ready to pay more than what was set in the municipality tender or in the state’s agreement with the residents, in accordance with their own financial interest,” the official said. “The state and the municipality are more tied to the agreements, and the requirements of committees and approvals, with every change or alteration necessitating a lot of red tape.”

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